Non Farm Payrolls Confirm Dour Forecast

US Non-Farm Payrolls printed at 88K slightly below the already muted expectations of 100K as US economy displayed clear evidence of deceleration.

Every component of the report was worse than forecast with Average Hourly earnings growing only 3.7% vs. 3.9% consensus and manufacturing payrolls shrinking yet another -19K vs. -14K forecast. Furthermore, the months prior data was revised downward for the second consecutive month.
Despite the less than impressive US results, the EURUSD was unable to muster much of a rally. As we have noted before, the currency pair was grossly overbought and traders needed to see recessionary-like numbers from the US employment report in order to propel the euro higher. The present situation leaves the market at a standstill, as neither EZ data nor the US data have providing unequivocally clear signals this week and range bound conditions are likely to persist. Trading in the EURUSD today may also be cautious ahead of the French presidential election this weekend, as traders may choose to clear the small political risk of a Sarkozy loss before attempting any further euro longs.

Nevertheless, today’s news offers no help to dollar bulls as it clearly shows an economy in a slowdown and any bounce that the greenback may enjoy will be strictly a function of technical rather than fundamental factors.